Good news: Obama’s dumb “Buffett Rule” budget gimmick would reduce the deficit by around … four percent

posted at 9:57 pm on January 27, 2012 by Allahpundit

What’s the saddest part of this? That The One is so desperate to demagogue Romney and the GOP as the party of the rich that he’d make a chump-change gambit like this the centerpiece of his budget agenda? Or that liberals are pretending to be impressed? Good lord, I hope they’re pretending.

The liberal outfit Citizens for Tax Justice expects $50 billion in new revenue from the Buffett Rule in year one. Other estimates peg the total take even lower. Remember, the feds spend north of $10 billion each day.

Republican lawmakers — noting the absence of real numbers — attacked the plan as a political charade, an attempt to score points in the November election instead of a serious policy to reduce federal debt. One outside analysis by the non-partisan Tax Foundation indicates the rule would generate another $36.7 billion a year in revenue — far from enough to make a serious dent in a national debt of $15 trillion.

“It’s a smokescreen,” Rep. Steve Scalise (R-La.) told POLITICO. “Barack Obama just wants to pit one group against another so he can raise more money to spend on a bloated government.”…

On average, someone hauling in $1 million a year might have fork over another $50,000 to Uncle Sam. That’s a sizable tab for individuals but not a lot for the government, said David Logan, an economist at the Tax Foundation, a Washington, D.C. think tank.

“It’s an insignificant revenue gain,” he said. “I view it more as a political tool than anything else, because it doesn’t raise enough revenue to dent the deficit or the debt.”

Curiously enough, the White House has been in no rush to release its own inevitably disappointing projection. $36.7 billion would reduce the projected deficit for 2012 by a tidy 3.8 percent — essentially a rounding error — but lefty Greg Sargent’s excitement is palpable at the thought of Democrats forcing a high-profile floor vote in the Senate on the Buffett Rule to make Republicans squirm. The response to this will be, “Well, $50 billion’s better than nothing,” but that’s actually not true. It’s less healthy for the country to waste time on gimmicks like this, which sustain the fantasy of low-information voters that tax hikes on the rich can close the hole in the budget, than it would be for Obama to offer nothing and let the sense of crisis grow until Congress feels public pressure to act on mandatory spending. That’s the only real fix, of course, but reforming Medicare doesn’t get Obama any closer to his real goal of winning re-election whereas the “Buffett Rule,” a.k.a. the Romney Rule, does, so we’re going to jerk around with this red herring for months and months and months to come. Those priorities deserve a second term, no?

Here’s Reason editor Matt Welch with a better idea for how to make Warren Buffett a featured player in this debate.

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this is just obama playing the fairness card. this has never been about the ‘deficit’. Just like the cap gains thing…it is the fairness issue.

Punitive leftism needs an enemy. Fortunately, for the left, a very large part of the electorate are casual voters…i.e. vote for the cutest guy for example. The casuals have no clue about anything financial or political…well, they do understand simple things…like ‘i’ll send you a check if you vote for me’

Well, $50 billion’s better than nothing,” but that’s actually not true. It’s less healthy for the country to waste time on gimmicks like this, which sustain the fantasy of low-information voters that tax hikes on the rich can close the hole in the budget, than it would be for Obama to offer nothing and let the sense of crisis grow until Congress feels public pressure to act on mandatory spending.

You may be right. But then again, about 20 other gimmicks across a broad array of programs where spending can be cut (most cases) or revenues increased (closing special interest loopholes) and you suddenly have a solution.

On average, someone hauling in $1 million a year might have fork over another $50,000 to Uncle Sam.

Need to look at the underlying calcs. If you were to raise someone paying at a 15% rate to 31% (pre-1992 rate), that would mean forking over another $160,000. And then you’re looking at nearly a 15% net change- and that is a significant and serious change.

Can someone correct me here- what am I missing in the numbers behind the $50k calc?

Oh no no nooooo…we can’t have no stinkin entitlement reform, that might actually end up solving our deficit problem and then what will Obama use to blackmail his base , which sux off taxpayer’s teet for a living ? Let me tell you how this $ 50 Bil ” profit ” will be sold to Obama’s base :

If you were serious about wanting to have an impact on lowering the debt and deficit you might want to stop spending ! Just a thought because after all we send it they spend it, regardless of the % taxes are paid at.

Because if you tell big government politicians that revenue goes up by $50 billion, they’ll spend $100 billion. Or more.

malclave on January 27, 2012 at 10:10 PM

That’s an excellent point, but it’s also comical how the leftists always label Reaganomics as “trickle- down economics,” when a tax increase is the essence of a “trickle-down” policy.

When a business has to pay more in taxes, the business makes up for the loss in profit at the expense of the consumer. I’m a college kid, and even I learned this in middle school. That little known fact is called “supply-side economics,” which to a liberal is like holding a cross to Dracula.

It’ll give 4% in revenues…..if it doesn’t cost more than that in revenues. I’m sure all those ‘Buffets’ out there are going to be lining up to pay that additional tax, right? There are either loopholes that will allow people to avoid it, or some people will be so pissed off that they’ll decide not to invest here.

Winning solution from complete morons.

How about just cutting the spending in any and every way possible before you start raiding bank accounts to cover the cost of your progressive socialism?

Lefties want to conflate payroll and income taxes. They don’t want to say that.

If they were honest, they’d just say when you add income+payroll taxes average people pay a huge share of their income in taxes. We’ll that’s true…because of SS/Medicare.

I wish lefties would just say this, because they tend to say things like the ‘effective’ tax rate is 21 percent for middle income people.

So to all you leftists that comment, just say that the middle class percentage wise pays a lot of taxes because of SS/Medicare…and you’d like the ‘rich’ to pay more income taxes to offset the caps on SS and the fact that DIV/Cap Gain/INT income is not taxed for SS/Medicare.

you’d sound a lot less stupid if you said that

this is why Buffet and his minion sound disingenuous….just tell the truth…Warren should pay 30 percent on his cap gain/DIV/INT income

Of course the stock market would tank, pension funds would go under, but it would be FAIR

So will Buffett stop fighting the IRS and pay the $ 1 bil he already owes in back taxes ? What about GE ? Will Immelt pay any taxes for GE this time ? How about Google and the money they are shielding from IRS so that they don’t have to pay taxes ? Will that money be taxed ? Will we get to see Buffett’s now famous secretary’s tax returns and her bank statement ? What are her deductions ?
Questions questions :(

So will Buffett stop fighting the IRS and pay the $ 1 bil he already owes in back taxes ? What about GE ?

burrata on January 27, 2012 at 10:48 PM

You know, if conservatives were actually serious and disciplined about teaching jerks like Buffet and Immelt a lesson, we would boycott their every company and product. Go Galt on their enterprises.

But as a group, we’re not. I noticed that Glenn Reynolds in the run-up to the light bulb ban always pointed his Amazon links to Sylvania bulbs, not GE. He points to bloggers, not to lefty media. Discipline.

Not until it really hurts will we do anything. And we’re not there yet, and when we are, it will likely be too late.

Not very hopeful. Cantor learned very little from Reagan and is too small-minded to grasp the bounds of his power and comprehend the type of deal that’s achievable. Keep in mind that Reagan had prior executive experience, as the governor of California (larger than many nations), and understood the importance of getting things done, even when the final outcome was less than perfect.

It was, and I do too. But what I’ve learned: we are the leader we’ve been waiting for. My company interacts with a lot of politicians, and we help their campaigns. Today, for example, I trained two patriots on my company’s software to help take out Iowa’s top democrat. Not only are they on fire to help, but they’re savvy. Just volunteers, but they have big plans to get involved and make a difference.

There’s nothing better than spending time rubbing elbows with the grassroots. It’s quite beautiful to see such a love of country on a regular basis.

Good times, good times… days of big hair, big economy, and big America.

beatcanvas on January 27, 2012 at 11:16 PM

More like the days before we let China take away our manufacturing base and all its jobs.

I’ll never understand why people on both the left and right come up with all kinds of inane explanations for why there are no jobs when the answer is actually clear and present.

It doesn’t matter whether the tax rate is at 15% or 20% or if there are more or less unions or if the environment is pristine or polluted. This country sold itself down the river, hypnotized by the allure of cheap shiny gadgets and trinkets. If you remember the old saying- we actually did believe that with China open the US would be selling the Chinese a billion toothbrushes.

I hate the “This measure would only help [NAME OF BIG PROBLEM] by [TINY X]%” argument.

It’s CONSTANTLY being used against new oil drilling: “The oil from this field would supply just 6% of our energy needs.” Well, yeah, our energy needs are gigantic, so of course one field, however big, won’t make much of a difference. But it will be an improvement, on which further improvements can be made.

Relying on the “will only…” argument, governments will rarely adopt ANY policy or measure, because the big-problem denominator is always going to be an enormous number, against which the much-smaller solution numerator will rarely appear substantial.

Whether the Buffett Rule is wise or not should be judged on its merits, not the fact that it will “only” cut the deficit 4%.

Had on two different operas tonight, nice fire, a cool refreshing adult beverage or two. I’m in the dog house, even still, go figure. Being new I’ve been swapping songs with some other commenter’s on the QOTD threads. I think it freaks them out a bit how broad my musical interest are. I haven’t dropped any Opera on em yet. Still feeling em out.

Thanx for giving this attention, but a lot of us have known all along that this was a “chump change gambit” and it’s just part of Obanal’s smoke ‘n’ mirrors repertoire. And knowing they’ve got this $50billion–they’ll enact entitlements spending 10 times as much or give out more silly greenscam loans. The real “saddest part” is that everything this guy proposes is as silly or sillier and won’t change a thing. Yet the Obamabots just keep swilling his kool-aid. Who needs hardcore drugs when ya’ got that?

how much did maryland project their millionaire’s tax would raise?? and how much did it actually raise?? these projections are done in a vacuum. put em in the reality world and watch reality shred those projections all to hell.

This “analysis” assumes nobody will change their behavior is their tax rate is doubled.

So an evil rich guy makes $10M now and pays $1.5M. Tomorrow Obama says that $1.5M is now $3M. Does any sane person expect the evil rich guy to just sit back and say, OK here’s an extra $1.5M Mr. President?

Of course not. He will do everything he can to move money around to keep his tax rate at $1.5M. If anything this bill/proposal should be renamed to TAX LAWYER AND ACCOUNT FULL EMPLOYMENT ACT